Banks, industrial firms rally stocks

Experts say companies feel good about economy and expect growth

Marley Jay, Associated Press

Published 10:11 pm, Thursday, April 20, 2017

Photo: Mark Lennihan

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FILE - This March 4, 2013, file photo shows a sign for Wall Street on the side of building near the New York Stock Exchange. Stocks are recovering early Thursday, April 20, 2017, as banks rise with bond yields and interest rates. Investors are also buying consumer-focused companies and small firms, a bet that the U.S. economy will perform well. (AP Photo/Mark Lennihan, File) ORG XMIT: NYBZ410 less

FILE - This March 4, 2013, file photo shows a sign for Wall Street on the side of building near the New York Stock Exchange. Stocks are recovering early Thursday, April 20, 2017, as banks rise with bond yields ... more

Photo: Mark Lennihan

Banks, industrial firms rally stocks

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U.S. stocks climbed Thursday as industrial companies, banks, technology and materials firms and energy companies all rallied. A strong day of corporate results left investors feeling better about the economy.

For more than a week investors have been poring through company earnings for signs the economy is growing at a faster pace, and on Thursday they felt they found it. Railroad operator CSX gave transportation companies like railroads and airlines a big boost while Sherwin-Williams raised its annual projections and helped basic materials makers go higher.

It's still early in this round of earnings reports and a few high-profile companies have disappointed Wall Street this week, so stocks have wobbled recently. But for the most part experts and investors are encouraged by what they're hearing. They say companies feel good about the economy and expect stronger growth and bigger profits.

"The major takeaway so far to earnings season is the CEOs are still saying we're poised for growth," said J.J. Kinahan, chief market strategist at TD Ameritrade. "Last quarter was sort of the first time we heard this theme."

The Nasdaq composite gained 53.75 points, or 0.9 percent, to an all-time high of 5,916.78. The Russell 2000 index of smaller-company stocks added 17.02 points, or 1.2 percent, to 1,384.15.

American Express had a solid first quarter as its credit card members spent more and kept bigger balances on their cards. The stock gained $4.47, or 5.9 percent, to $80.02. SLM, the parent of the student lender Sallie Mae, reported much stronger revenue than expected and its stock climbed $1.17, or 10.1 percent, to $12.70. Citizens Financial rose $1.05, or 3.1 percent, to $35.27 after its report.

"The banks are the shining star" so far, Kinahan said, although he speculated that Goldman Sachs had a down quarter because it's lost several top executives to the Trump administration.

Railroad company CSX announced a bigger profit and more revenue than Wall Street expected in the first quarter. CSX also said restructuring and spending cuts will increase its profit by about 25 percent this year. The company is cutting jobs and reorganizing after it hired Hunter Harrison, former head of Canadian Pacific, as its new CEO last month. The company also said it will buy back more stock and raise its dividend. CSX stock jumped $2.65, or 5.6 percent, to $49.58.

Railroads and transportation companies like trucking companies and airlines rose. Industrial companies were among the top performers Thursday.

Sherwin-Williams raised its profit guidance for the year as paint sales jumped and prices increased. The stock added $12.48, or 4 percent, to $324.02. That helped basic materials companies. So did steel maker Nucor, which rose $2.73, or 4.7 percent, to $60.35 after its first-quarter results were stronger than expected.

Verizon dipped 53 cents, or 1.1 percent, to $48.41 as it lost wireless cellphone subscribers and its profit dropped 20 percent. That helped push other telecom companies lower.

Other stocks that pay big dividends also fell. Utilities, companies that make and sell household goods, and real estate investment trusts also declined as bond yields rose. That made the stocks less appealing to investors seeking income.

Equipment rental company United Rentals flopped after its sales fell far short of expectations. The company said rental rates are still somewhat weak, and its stock lost $6.21, or 5.2 percent, to $113.24.

Energy prices wobbled and finished lower. Benchmark U.S. crude slipped 17 cents to $50.27 a barrel in New York while Brent crude, the international standard, rose 6 cents to $52.99 a barrel. However energy companies climbed higher. They stumbled Wednesday as the price of U.S. crude sank 3.8 percent.

State and federal authorities sued Ocwen Financial and said the mortgage lender botched the handling of millions of accounts. The Consumer Financial Protection Bureau said Ocwen generated errors in borrowers' accounts, failed to credit payments, illegally foreclosed on homeowners, and charged borrowers for products without their consent.

Ocwen is one of the nation's largest non-bank mortgage lenders, focusing mostly on subprime and delinquent mortgages. Its stock plunged $2.91, or 53.9 percent, to $2.49 in heavy trading.

The dollar rose to 109.31 yen from 108.70 yen. The euro inched up to $1.0722 from $1.0721.

Paris' CAC 40 jumped 1.5 percent as traders bet on a growing likelihood of a victory for centrist Emmanuel Macron in the upcoming presidential election. Polls have long showed a tight race between four candidates ahead of the first round of voting Sunday.